Rachel Reeves faces her toughest test yet as chancellor when she delivers the spring statement this Wednesday. In response to the Office for Budget Responsibility’s latest forecast, which will be published the same day, she is expected to announce further cuts to public spending in several areas, alongside the cuts to disability benefits that the government set out last week. Ministers have spent the past week arguing that these cuts do not technically constitute austerity because they will not be as deep as some of those made during the Conservative years. However, what label you put on these cuts matters far less than their impact. They would increase disability and child poverty and further undermine the provision of public services, an indefensible record for the first term of a Labour government.
Reeves faces the most difficult set of circumstances of any chancellor in recent decades. She has inherited an economy beset by long-term structural problems, exposed by the financial crisis, and that have gone unaddressed by governments of both colours: low levels of business investment, sluggish productivity growth, gaping regional inequalities and, since 2008, stagnant living standards. These were made worse by successive Conservative chancellors after 2010, who introduced tax cuts that disproportionately benefited the better off while slashing financial support for low-income parents – the poorest tenth of families with children lost £6,000 a year on average between 2010 and 2024 as a result of their changes – and who failed to take advantage of historically low interest rates to borrow to invest, instead taking the ideological decision to reduce the size of the state regardless of the consequences.
